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Traders take stock of China rate cut

Traders looking for Nasdaq 5,000

U.S. stock index futures are pointing to a higher open on Wall Street Monday as investors react to the second rate cut by China's central bank in three months.

The People's Bank of China (PBOC) cut benchmark interest rates by 25 basis points to 5.35 percent on Saturday as deteriorating economic conditions forced the central bank to shorten the time gap between policy moves.

The rate cut came hours before the publication of official purchasing managers index (PMI) for February, which showed the country's manufacturing activity contracted for a second straight month. On Monday, however,HSBC's final PMI reading of China's manufacturing sector in February came in at 50.7 on Monday, higher than the flash reading of 50.1.

In the U.S., investors will be watching for a number of data releases Monday, including personal income data, consumer spending and core PCE prices for January published at 08:30 a.m. (ET). In addition, ISM Manufacturing forFebruary and construction spending data are due at 10 a.m. ET.

Companies reporting before the bell Monday include Intercept, Pharma and Sotheby's while among those reporting after the bell there are Mylan Labs, Palo Alto Networks and Salix Pharma.

European and Asian markets were trading higher Monday following the move to stimulate the world's second largest economy.

In Europe, investors cheered data showing that deflation in the euro zone eased in February while the rate of unemployment fell in January.

- CNBC's Evelyn Cheng and Ansuya Harjani contributed to this market report.